February 2022

On February 17, 2022, the Ministry of Power released the much-awaited Green Hydro­gen Policy, which had been on the cards for at least one year. The National Hydrogen Mission had first found a mention in the finance minister’s budget speech last year and was then formally launched by the prime minister on Independence Day. The country’s clean energy industry has been waiting for a formal policy announcement on green hydrogen since then.

The recently released document is the first phase of the larger policy framework. It has laid out many encouraging provisions for manufacturers of green hydrogen and green ammonia, including a waiver of interstate transmission charges till June 2025, priority for grid connectivity, grant of open access, energy banking and renewable purchase obligation benefits. In addition, the policy allows manufacturers to set up bunkers near ports for the storage of green ammonia that must be exported via ships.

The policy intervention comes at a time when there is a global thrust on green hydrogen development and energy companies are racing to capture larger market shares. India, itself, has witnessed many recent project announcements and collaborations on this front. While public sector organisations such as NTPC, Indian Oil, and the Solar Energy Corporation of India are expected to launch big tenders soon, private energy players such as Adani, Reliance and Hero Future Energies have also announced massive plans in this space. Domestic manufacturing of electrolysers too has started gaining traction with companies such as Ohmium setting up production units in India.

Widespread uptake of green hydrogen, going forward, will depend on its cost viability with respect to the more widely used grey or blue hydrogen. While renewable energy costs are already quite competitive in India, electrolyser prices need to be brought down further through incentives. Moreover, to create demand, mandates or obligations for green hydrogen use in energy-intensive industries need to be introduced.

As of now, only the first phase of the policy has been launched. These remaining critical factors are expected to be clarified in the next phase to drive growth in this fast emerging space.

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